AK, the loser state


These days frost-covered Anchorage looks a little like the surface of a heavily crevassed glacier from the Chugach Mountains above/Craig Medred photo

Alaska sucks, but living in the Far North beats being some hillbilly in West Virginia.

That’s the New Year view from the report on the Best States for Business. Alaska ranks 47th on the business list, but comes in second only to West Virginia for the worst “quality of life.”

Apparently, somebody tipped Forbes off to the fact global warming has ended, and the 49th state is back to being colder than a witch’s body part in winter. The state’s largest city just finished a December three degrees colder than normal, and January isn’t looking so hot.

“Strong winds and cold temperatures on the way,” the National Weather Service was warning Anchorage residents in a special weather statement Wednesday.  Temperatures were forecast to dip to zero and below by Thursday.

The average Anchorage low for January, the coldest month of the year, is about 10 degrees. Every day of the New Year has gone colder, leaving the city encased in a layer of frost that does look rather attractive for the few hours each day the sun is out, if the sun is out.

But the bitterly cold weather is the least of Alaska’s problems at the moment. As Forbes notes, crime is up and people are fleeing as the continuing global slump in oil prices drags the state’s economy deeper and deeper into recession.

The 49th state continues to face a revenue shortfall of more than $3 billion per year. Gov. Bill Walker has already robbed Alaskans of half of their beloved Permanent Fund Dividends in hopes of using the money to help shore up the budget and denied oil companies tax credits that it had been hoped would encourage them to up the ever declining flow of oil through the transAlaska oil pipeline.

Instead the oil industry is cutting jobs, and the economy is spiraling downward.

Summer can’t come soon enough to welcome the now nearly 2 million May to September tourists who bring north an infusion of cash.

“Alaska’s economy is unlike any other in the U.S.,” Forbes noted. “It is estimated that the oil and gas industry is responsible for more than 80 percent of the state’s revenues….Alaska is one of only four states where gross state product is down over the past five years and the employment outlook ranks as the fourth worst in the country, according to Moody’s Analytics.

“One plus: the state’s financial health is rated the best based on debt and other fiscal obligations, according to a study from the Mercatus Center.”

This is because the Alaska is at the moment sitting on more than $55 billion in the oil-derived Alaska Permanent Fund.  The idea of spending any of that money is, however, anathema in the 49th state. Alaskans can’t even agree on whether it is OK to spend some of the interest earnings generated by the fund to keep government afloat.

Walker would like to see the state income tax reinstated even though it would bring in only a few hundred million dollars. The state’s best hope, given that state government has for decades been grown and funded by oil money, is for a climb in oil prices and increased oil production.

The markets, however, aren’t cooperating on prices, and both the cuts in oil tax credits and threats of new taxes on oil discourage efforts to bring newly discovered North Slope fields online.

Alaska has problems. Lots and lots of problems.

“We know that our state has the highest per capita spending in the country,” tax director Ken Alper told the Alaska Journal of Commerce in December. “But it’s also true Alaska really is different. Just like industry, we have high costs of living; we have big logistical costs; the state funds the majority of public education, which is not true all over the country where it’s largely supported by local property taxes and you get big disparities between wealthy school districts and poor.”

State spending on education and the budget for the Department of Health and Social Services account for about 60 percent of state costs, and Alaska politicians don’t want to trim either.

This failure to cut depresses the state’s conservatives. The failure to tax depresses the state’s liberals. The only good news for either might be that more people are now leaving Alaska than are moving north. More than 5,000 left last year, Forbes notes.

And with everyone who leaves, the state’s costs go down. If half of the state’s population of 740,000 were to desert, the governor and the Legislature might be able to balance the budget.

And then the survivors in Alaska could go back to being happy again, as they were only two years ago when the Gallup Healthways Well-being Index scored Alaskans the happiest people in the United States.

Alaskans were riding high in 2014. They scored number one in the country on liking what they did and being motivated every day; number two on good health and good energy as well as managing their economic lives to reduce stress and increase security; and number three on liking where they lived, feeling safe and having pride in their community.

The only category in which they dropped out of the top three was having “supportive relationships and love in your life,” and even there they scored a respectable seven.

All this goodness, Gallup said, allowed Alaska to top “the rankings for the first time; Alaska has ranked in the top 10 four times in seven years. Alaska is the only state to rank in the top 10 in all five elements and ranks first in purpose well-being.”

That was then. This is now:

Oil and gas jobs leaving. Jobs in business services leaving. Construction jobs leaving. Government jobs leaving. And Alaska’s largest city shrinking.

But Alaskans have been here before, and they well know that in crisis there is opportunity.



















3 replies »

  1. Crisis in opportunity? Hardly true. The State is screwed. The politicians won’t be fiscally responsible. The residents won’t give up their welfare PFD. So the State is just going to spiral down and become a wasteland.

    • crisis is opportunity, Stan. there is no doubt about that, but the world is full of people who pass up opportunity after opportunity after opportunity. it is quite possible Alaska does that, too.

  2. ” Abandon Hope All Ye Who Enter Here” should be the new sign placed on the Al-Can at the border.

    But let us not forget that with all the economic losers in AK this year, One east coast company (The Carlyle Group) stands to make millions off the management of our Permanent Fund… Walker stashed the $666 million away into the coffers, Wall street and large global corporations will profit greatly off of our loss.

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